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MPs call for compulsory financial education

MPs call for compulsory financial education

Category: Money

Updated: 01/02/2011
First Published: 01/02/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

More than 120 MPs from all parties have joined together to call for the introduction of compulsory financial education in UK schools.

Over 120 MPs have joined the All Party Parliamentary Group (APPG), making it one of the largest groups of its type ever, all with the target of ensuring young people understand money, spending and debt.

The group has been formed against a backdrop of rising tuition fees and the continuing effects of the financial crisis.

The campaign is being backed by the Personal Finance Education Group, Which?, Citizens Advice, as well as big names in the banking industry including Barclays and Capital One.

The financial challenges faced by students are stark and there is evidence that many are hugely under prepared to make important financial decisions.

Figures show that just 68% of students could identify the cheapest loan on offer, while less than a quarter expect to finish their studies owing more than £20,000, despite the fact that fees are set to rise to up to £9,000 a year.

"Young people are entering an increasingly complex financial world of store cards, mobile phone tariffs, credit agreements and financial marketing," Justin Tomlinson MP, chair of the APPG, commented.

"Through my MP casework, I have seen first-hand the implications for those who have made poor decisions, too often through a lack of understanding.

"I am passionate that financial education is the best way to equip all young people with the relevant skills to make informed decisions and empower them as consumers.

"I have been working hard to secure cross-party support to help champion this cause, so the next generation is equipped to confidently address the financial challenges ahead."

Recent research by AA Financial Services showed many of those aged 18-22 have little grasp of common personal financial terms. For instance, only half (55%) understand AER (Annual Equivalent Rate - which measures savings interest rates). Some thought it was a Government earnings measure and a few thought it was a European air traffic control abbreviation.

"Too many people get into financial difficulties because they don't know how to handle their money properly and if it were part of the national curriculum I'm certain that future generations will be much less likely to make the mistakes their parents might have made," said Mark Huggins, director of AA Financial Services.

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